Lectura 04 C4 - EPT 04. A DEA Approach For Evaluating The Labor Efficiency in The Rural Hotel Industry A Case Study in Spain

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N.
Pulido /
D.V. Borrero
A DEA Approach for Evaluating the Labor Efficiency
in the Rural Hotel Industry: A Case Study in Spain
Abstract
In this paper, labor efficiency in the rural hotel industry is analyzed while considering the characteristics
regarding labor and infrastructure of the various Spanish provinces. The methodological procedure consisted
of the analysis of 52 Spanish provinces. As analysis, Data Envelopment Analysis (DEA) and Multivariate
Analysis have been used. Although rural tourism is consolidated in the Spanish holiday culture, the effect of
labor efficiency on Spanish provinces is uneven. Performance depends on the geographical area; thus, labor
efficiency is only achieved in Asturias and Balearic Islands, where rural tourism has a strong and positive
impact on employment. The variable length of stay of the holiday period carries important weight for labor
efficiency to be reached in said provinces. It can be observed that hotels located in places with charm and
with special environmental protection contribute directly to the labor efficiency of the area due to the direct
relationship between the area of protected land and the labor efficiency of the province. Several provincial
groups are established with a variety of different characteristics, which confirms that the level of labor ef-
ficiency in the sector has yet to be maximized.
Keywords: rural tourism, hotel industry, efficiency assessment, labor efficiency, data envelopment analysis, Spain
1. Introduction
The evolution of the employed population in Spain has been marked by the economic crisis since, in 2008,
the employed population suffered a major collapse. Similar to other sectors, the agricultural sector has also
been immersed in a trend of job losses; this situation is not temporary but structural because it has remained
the case since the 1960s1. This scenario results in an uncertain future in the agricultural sector.
A possible solution to this problem is rural tourism; this is relevant in terms of both income and the creation
of jobs. Rural tourism constitutes a major economic alternative for rural areas and a strategic axis for rural
territorial development. So, the rural hotel industry can be a key activity to generate employment and rural
development. This sector provides opportunities for local employment (Sánchez & Sánchez, 2018), fiscal
income, and economic diversity (Wang & Pfister, 2008), thereby enabling the development of certain eco-
nomic rural areas and socially depressed areas to be promoted (Yagüe, 2002; Fleischer & Felsenstein, 2000;
Dernoi, 1991). The potential of the sector has been confirmed since the number of people employed in rural
tourism has tripled over the last 15 years.
Francisca J. Sánchez-Sánchez, PhD, Corresponding author, Professor, Department of Economics, Quantitative Methods and Economic
History, Pablo de Olavide University, Spain; ORCID ID: http://orcid.org/0000-0001-5325-3667; e-mail: fsansan@upo.es
Ana M. Sánchez-Sánchez, PhD, Professor, Department of Economics, Quantitative Methods and Economic History, Pablo de Olavide
University, Spain; ORCID ID: http://orcid.org/0000-0002-6591-954X
N. Pulido, Department of Applied Economics I, University of Seville, Spain
D.V. Borrero, Department of Applied Economics I, University of Seville, Spain
1
Reforms in agricultural policy (single-farm payment, compliance with environmental standards, reduction in subsidies, etc.) have
caused a significant loss of income, the abandonment of farms, and, consequently, the loss of employment in the agricultural sector.
Original Research
Francisca J. Sánchez-Sánchez
Article / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero
Vol.
A DEA70/Approach
No. 4/ 2022/ 603Rural
in the - 623Hotel Industry, Spain
An International Interdisciplinary Journal UDC:
Vol. 70/
338.48-44(1-22):640.4(460);
No. 4/ 2022/ 603 - 623 https://doi.org/10.37741/t.70.4.5 603
©2022 The Author(s)
Given the role of employment as a key factor in assessing the importance of tourism, this paper focuses on
this variable and studies the impact of the sector in terms of labor efficiency in various Spanish provinces.
The measurement of efficiency is a topic of growing interest, mainly due to the competitive environment in
which we live, where improvements in profitability and the pursuit of optimal and efficient use of resources
are constantly sought (Tavares, 2002; Seiford, 1997). The definition of economic efficiency establishes “that
all effects resulting from an economic sense surpasses integrated effort that you have it” (Angelescu et al.,
2005, p. 14). In other words, efficiency is associated with the maximum output that can be achieved using
certain resources (inputs).
The question that arises is whether rural hotels are capable of creating employment efficiently using available
resources. Given the enormous competitiveness in tourism, the study of labor efficiency allows us to know
how the hotel industry contributes to increasing the competitiveness of the sector and to the development of
the rural environment. The main novelty and contribution of the paper is the type of hotel analyzed, focusing
on a very specific geographic destination in rural Spanish areas.
In this context, the first objective of the present paper is to evaluate both labor efficiency in Spanish rural hotels
and the development of a provincial efficiency ranking. Secondly, provincial groupings will be determined
according to the level of efficiency, which will enable the results of the provincial ranking to be validated.
In order to measure labor efficiency, a non-parametric method, known as Data Envelopment Analysis
(DEA), will be applied based on mathematical programming. This analysis has proved useful in a wide
variety of contexts and applications (Yang & Li, 2018; Gémara et al., 2018; Gkiza & Nastis, 2017; Ramírez-
Hurtado & Contreras, 2017; Balaguer-Coll & Prior, 2009; Toma, 2014; Alzua-Sorzabal et al., 2015). The
DEA methodology has been frequently used to study hotel efficiency (see, for example, Lado-Sestayo &
Fernández-Castro, 2019; Kularatne et al., 2019; Sellers-Rubio & Casado-Díaz, 2018; Solana-Ibáñez et al.,
2016; Ohe & Peypoch, 2016; Benito et al., 2014; Barros, Botti, Peypoch, Robinot et al., 2011; Barros,
Botti, Peypoch, & Solonandrasana, 2011) using different inputs and outputs. These papers focus on the
study of the sample, on the development of the methodology used, or on the identification of the factors
that determine it. Morey and Dittman (1995) applied DEA for the first time in the hotel industry to evalu-
ate the performance of 54 hotels in the United States. Since then, the hotel efficiency literature has widely
applied the Cooper-Charnes-Rhodes (CCR) and Banker-Charnes-Cooper (BCC) models (Banker et al.,
1984; Charnes et al., 1978).
The present paper is structured as follows. Section 2 analyses the main features of the rural hotel industry in
Spain. Section 3 compiles works that have applied the DEA analysis to the tourism sector. Data and meth-
odology are presented in Section 4. The results are given in Section 5. Finally, in Section 6, a summary of
considerations is made.
2. The rural hotel industry in Spain

Spain is the world leader in holiday tourism, ranking second in terms of tourist income and number of tourists
(World Tourism Organization [UNWTO]). This sector shows a dynamic behavior in continuous expansion
even in periods of crisis and in synergy with other sectors, being one of the axes for the economic develop-
ment of the country (Cuñado et al., 2011).
The offer of rural accommodation has been a fundamental element for the tourist growth of rural areas
(Sánchez-Sánchez & Sánchez-Sánchez, 2021a, b; Cánoves et al., 2005). In Spain, tourist accommodation
is classified into three different categories: hotel accommodation, non-hotel accommodation, and rural ac-
commodation. In turn, within each of these modalities, different subcategories are established (see Table 1).
Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

A DEA Approach in the Rural Hotel Industry, Spain
An International Interdisciplinary Journal Vol. 70/ No. 4/ 2022/ 603 - 623 604
Table 1
Types of tourist accommodations in Spain
Non-hotel Rural
Hotel accommodations accommodations accommodations
Hotels Tourist apartments Rural hotels
Aparthotels Tourist lodgings Rural houses
Hostels Tourist camps
Boarding houses Camping areas
Others according to the law
Source: Author’s own, based on Law 2/2011, of January 31, on the development and modernization of tourism in Extremadura (Ley 2/2011).
The main keys to rural accommodation are functionality and integration into the rural environment, its
location, the type of construction (which should be as similar to the surroundings), the restoration offered,
the interior design, etc.
In the decade of the 80s of the 20th century, a regulatory development for rural accommodation took place
in Spain. As a consequence of this, there was a generalized growth of the supply, although it is from the 21st
century when there is a more intense growth, reaching the spread of the idea that the supply is oversized, not
corresponding with the demand, which gives place at low occupancy levels (Grande, 2006). This oversiz-
ing is especially evident in some time periods. The occupancy rate is quite uneven depending on the period
considered, producing a decrease in the occupancy level during the period of economic crisis (years 2007 to
2013), while from 2013, the occupancy rate acquired considerable growth. However, in the hotel supply, the
growth is constant, being even more significant during the period of economic crisis (Figure 1).
Figure 1
Supply evolution and occupancy rate in Spain (%)
25
20
15
10
Occupancy rate
Occupancy Rate Rural
Rural hotels
Hotels

Source: The authors, based on data from the Spanish National Statistics Institute.

At present, rural tourism in Spain is fully established, having experienced a very notable increase, especially in
the last five years; this boom has contributed to generating employment in the sector (Figure 2). The increase
in the number of tourists is related to a significant change in the supply of rural hotel accommodations. In
this sense, the trajectory of rural hotel accommodation shows a progressive expansion (Figure 1). However,
despite
10% this growth, Spanish rural tourism is in an intermediate position compared to the most established
destinations in this type of tourism, such as Great Britain, Germany or France, and the countries of Eastern
9%
Europe
8% where this type of tourism is incipient (Cánoves et al. 2012).
7%
6%
5%
4%
3%
2%
1%
0%

Figure 2
Evolution of tourists and employed population in rural tourism in Spain (%)
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
% Rural tourists % Employees in rural tourism

Source: The authors, based on data from the Spanish National Statistics Institute.
3. Efficiency analysis in the tourism sector

Efficiency evaluation is basic for tourism management since it helps in the decision-making process and
provides a competitive advantage, becoming an important tool to measure the performance of hotels (for a
review of the literature on the sector, see, for example, Soltani et al., 2009).
To evaluate efficiency, non-frontier type models were applied (Wijeysinghe, 1993; Wassenaar & Stafford,
1991; Baker & Riley, 1994; Donaghy et al., 1995), although, at present, models based on the concept fron-
tier are used. With respect to this last approach, two different analysis methodologies are used: on the one
hand, the DEA and, on the other hand, the parametric stochastic frontier. The DEA methodology (Charnes
et al., 1978) is a non-parametric method of linear programming (see, for example, Barros, 2005a; Tsaur,
2001; Johns et al., 1997). As for the parametric stochastic frontier methods (Aigner et al., 1977; Meeusen
& van den Broeck, 1977), they are based on econometric models; some papers which use this methodology
to analyze efficiency in the hotel industry are those of Barros (2004), Weng and Wang (2006), Kim (2011),
Oliveira et al. (2013), Guetat et al. (2015) and Arbelo-Pérez et al. (2017). Recent studies apply more complex
methods to analyze efficiency, such as the meta-frontier (Assaf et al., 2012) or bootstrapping techniques (Assaf
& Cvelbar, 2010; Yin et al., 2015).
The DEA methodology has several advantages over stochastic frontier methods, but the main advantage is
that being a non-parametric method, it is not necessary to consider a functional way to relate inputs and
outputs (in the stochastic frontier method, it is necessary).
In recent years, many studies have applied the DEA technique for the analysis of various aspects of efficiency
in tourism activity, such as in hotel studies (Higuerey et al.,2020; Lado-Sestayo & Fernández-Castro, 2019;
Kularatne et al., 2019; Karakitsiou et al., 2018; Solana-Ibáñez et al., 2016; Ohe & Peypoch, 2016; Manasakis
et al., 2013; Assaf et al., 2012; Hsieh & Lin, 2010; Perrigot et al., 2009; Zhou et al., 2008), travel agencies
(Dragan et al., 2018; Ramírez-Hurtado & Contreras, 2017; Fuentes, 2011; Köksala & Aksub, 2007; Barros
& Dieke, 2007) or airlines (Shirazi & Mohammadi, 2019; Yu et al., 2019; Sakthidharan & Sivaraman, 2018).
There are also DEA applications in the rural tourism sector, for which certain studies analyze the productivity
in specific segments of tourism, as in Pestana (2005), which focuses on the efficiency of Portuguese Guest
Houses. Other work distinguishes between technical and scale efficiency (Pestana & Mascarenhas, 2005).

Regarding the study sample, the research has focused both on measuring the efficiency of the hotel brand and
on studying a sample of hotels in a given destination. From this last perspective, the papers have focused on
Asia (Liu et al., 2017; Yi & Liang, 2015; Huang et al., 2012; Wang et al., 2007); the United States (Anderson
et al., 1999; Brown & Ragsdale, 2002; Morey & Dittman, 1995), and Europe (for example, in the case of
Spain, see Deng et al., 2019 or De Jorge & Suárez, 2014).
Barros and Dieke (2008) compiled the inputs and outputs commonly used in hotel efficiency studies. At
the same time, Ball et al. (1986) classified the inputs and outputs used in the DEA methodology into three
thematic groups: financial variables, physical variables, and composite variables (reflecting financial and
physical variables, for instance, the number of rooms sold/total cooking costs.). As physical variables, the
number of employees (Cvetkoska & Barišić, 2017; Oukil et al., 2016; Hadad et al., 2012) and the number
of available beds (Assaf et al., 2015; Solana-Ibáñez et al., 2016; Barros, 2005a) are usually used. As financial
variables, operating costs (Anderson et al., 2000; Wang et al., 2007), employee salaries (De Jorge & Suárez,
2014; Barros, 2005b), and also profits, income, and sales (Barros & Alves, 2004; Shang et al., 2008; Parte-
Esteban & Alberca-Oliver, 2015) are used.
Table 2 shows a summary of the main characteristics of some papers related to hotel tourism efficiency. Re-
cent studies try to explain hotel efficiency through the identification of the factors that determine it (Assaf
& Josiassen, 2012; Assaf et al., 2012; De Jorge & Suárez, 2014; Parte-Esteban & Alberca-Oliver, 2015; Yang
et al., 2017; Sellers-Rubio & Casado-Díaz, 2018).
The papers which study hotel efficiency in Spain are quite recent (Benito et al., 2014; De Jorge & Suárez,
2014; Parte-Esteban & Alberca-Oliver, 2015; Fernández & Becerra, 2015; Solana-Ibáñez et al., 2016; Arbelo-
Pérez et al., 2017). In this context, there are no papers that have specifically studied the hotel efficiency of
the Spanish rural sector.
Table 2
References of DEA applications to the tourism sector
Time
Reference Units of analysis Inputs Outputs
frame
Hwang & Chang (2003) 1994- 45 Hotels in Number of full-time employees, Income per hotel room, food and
1998 Taiwan number of hotel rooms, food, and drink beverage income, other income.
storage area, operating expenses.
Barros & Mascarenhas 1999- 43 Hotels in Number of full-time employees, asset Sales, number of tourists, number of
(2005) 2001 Portugal value, number of hotel rooms. overnight stays.
Chiang (2006) 2001 24 Hoteles in Number of hotel rooms, food, and drink Performance index, food and beverage
Taipei storage area, number of employees, income, other income.
operating expenses.
Pulina et al. (2010) 2002- 19 regions and Labor costs. Sales revenue, value-added.
2005 2 provinces
Rabar & Blažević (2011) 2008 21 counties in Number of beds, number of bed places, Number of arrivals, number of nights,
Croatia number of employees. invoicing volume.
Barros, Botti, Peypoch, 2003- 22 Hotels in Accommodation capacity, number of Number of overnight stays.
Robinot et al. (2011a) 2007 French regions tourists.
Barros, Botti, Peypoch, & 1998- 15 Hotels in Number of full-time employees, book Sales, number of tourists.
Solonandrasana (2011) 2005 Portugal value of property, operating expenses.
Huang et al. (2012) 2001- 31 Hotels in Number of full-time employees, Total revenue, average occupancy rate.
2006 Chinese regions number of tourists, asset value.
Hadad et al. (2012) 2008 34 Hotels in Number of employees, number of hotel Number of tourists.
developed rooms, natural and cultural resources.
countries and
71 hotels in
developing
countries
Detotto et al. (2014) 2000- 21 regions in Gross fixed investment, labor costs. Sales revenue, value added.
2006 Italy
Benito et al. (2014) 2002- 17 regions in Number of accommodation places, Number of beds.
2010 Spain number of tourists.

Table 2 (continued)
Solana-Ibáñez et al. 2005– 17 Hotels in Number of beds, number of overnight Number of tourists who stay at least
(2016) 2013 Spanish regions stays. one night, determinants of efficiency
(tourist attractions and services),
coastal destinations, number of cultural
assets, number of museums, meeting
attendance percentage, number
of federated golf clubs, number of
restaurants, number of retailers.
Soysal-Kurt 2013 29 European Number of employees in tourism sector, Number of tourists, tourism income,
(2017) countries tourism expense, number of beds. number of overnight stays.
Cvetkoska & Barišić 2010- 11 Balkan Number of international tourists, Contribution of tourism sector to GDP,
(2017) 2015 countries national travellers, tourism expense. employment.
Sellers-Rubio & Casado- 2008- 17 Hotels in Number of hotels, number of beds, Average daily expenditure, income per
Díaz (2018) 2016 Spanish regions number of employees, length of stay, hotel room, average occupancy rate.
number of international tourists, sun
and beach tourist product, number
of hotels distinguished with quality
distinction.
Note: SBM indicates slacks-based measure.
Source: Authors.
4. Data and methodology

In this study, the data used has been obtained from official statistics published by the Spanish National Sta-
tistics Institute and the National Geographic Institute of Spain for 2016.
The unit of analysis is that of the province, which is understood as a Spanish administrative demarcation. Today
there are 52 provinces that comprise the entire Spanish territory. Each province is divided into a variable number
of municipalities, and their governments and administration are constitutionally attributed to provincial councils.
The selection of inputs and outputs is based on a review of the literature and the availability of reliable data
sources. In the paper of Sánchez and Sánchez (2018), variables such as the number of travelers, overnight
stays, establishments, places offered, and employees in rural tourism are used to analyze the impact of rural
tourism on employment, showing the usefulness of these variables to characterize the factor that they define
as Tourism-Labor Dynamism. Some of these variables are also frequently used in the literature to study tour-
ism efficiency (see, for example, Deng et al., 2019; Sellers-Rubio & Casado-Díaz, 2018; Soysal-Kurt, 2017;
Hadad et al., 2012; Huang et al., 2012; Lozano & Gutiérrez, 2011; Hwang & Chang, 2003).
A data matrix is formed of 6 variables collected for the 50 Spanish provinces (Ceuta and Melilla provinces
are excluded from the analysis due to a lack of information on many of the variables).
For DEA, only one output is considered: that of staff employed in rural tourism (y1). There are, however,
five inputs: Travellers (x1), overnight stay (x2), time of stay (x3), open establishments (x4), and seats offered
(x5). These variables, together with some descriptive measures, are shown in Table 3.
For the selection of inputs and outputs considered, it has been considered that employment in the rural tour-
ism sector is based on the number of tourists, their accommodation needs, and/or the resources to which
tourism is related (i.e., the necessary infrastructure).
The selection of inputs and outputs has been made according to the following efficiency approach. We consider
that efficiency occurs when, to serve travelers, taking into account the rest of the inputs, the maximum pos-
sible number of employees are hired. Therefore, we talk about efficiency in terms of generating the maximum
possible employment.
In order to verify the suitability of the selected inputs and outputs, an isotonicity test is performed (Sigala et
al., 2004; Chiang, 2006). Isotonicity refers to the assumption that the inputs and outputs must have a posi-
tive correlation, which means that the higher the value of the inputs, the higher the value of the output will

also be. Table 4 shows both Pearson’s correlation coefficients in pairs between the five inputs and the output,
and the p-values, to contrast the significance of the relationships between the pairs of variables.
Table 3
Data description
Std.
Variables Description Metric Average deviation
y1 Employees: number of staff employed in rural tourism People 450.84 332.509
x1 Travelers: number of people carrying out a tourist trip People 4,952.22 3,742.933
x2 Overnight stay: number of travelers housed in an establishment for the night People 12,257.12 10,664.009
x3 Length of Stay: duration of the stay in an area Days 2.50 0.763
x4 Establishments: places where rural tourism activities take place Number 314.86 232.202
x5 Vacancy: unoccupied bed in a tourist accommodation establishment Number 2,974.56 1,990.148
Source: Authors.
Table 4
Pearson’s correlation coefficients and p-values
Overnight Length of
Travellers Establishments Vacancies Employees
stays stay
Travelers 1 0.962** -0.158 0.705** 0.852** 0.642**
(0.000) (0.274) (0.000) (0.000) (0.000)
Overnight stays 0.962** 1 -0.036 0.791** 0.914** 0.705**
(0.000) (0.807) (0.000) (0.000) (0.000)
Length of stay -0.158 -0.036 1 0.259 0.154 0.345*
(0.274) (0.807) (0.069) (0.287) (0.014)
Establishments 0.705** 0.791** 0.259 1 0.916** 0.830**
(0.000) (0.000) (0.069) (0.000) (0.000)
Vacancies 0.852** 0.914** 0.154 0.916** 1 0.890**
(0.000) (0.000) (0.287) (0.000) (0.000)
Employees 0.642** 0.705** 0.345* 0.830** 0.890** 1
(0.000) (0.000) (0.014) (0.000) (0.000)
*p<0.05 **p<0.01.
Source: Authors.
All the inputs are significant and positively correlated with the output. These inputs are correlated with a 1%
significance except the variable length of stay, which presents a positive correlation with a 5% significance with
the output. Note that all the inputs (except length of stay) are positively correlated with each other, which
indicates that provinces with more tourists also have more overnight stays, more tourist establishments, and
offer more availability in rural tourism. The presence of these correlations points to a possible redundancy in
the dimensions of the selected inputs and outputs (except for the variable length of stay). To reduce the data
dimension, a Multivariate Analysis is carried out.
4.1. Data envelopment analysis

DEA is a non-parametric methodology that is employed to ascertain the efficiency level of a set of Decision-
Making Units (DMUs) on the basis of data that contain information on certain variables. The variables are
classified as inputs or outputs in accordance with a certain production process, and the information is con-
cerned with the consumption of inputs and the production of outputs.
DEA methodology assigns an efficiency value to each DMU in order to compare efficient and inefficient units.
The standard input-oriented CCR DEA model is used here, as introduced by Charnes et al. (1978). Let
U={1,2,…,u} be a set of independent DMUs, each of which consumes a set of different inputs, I={1,2,…,n},
in quantities to generate a set of different outputs, O={1,2,…,m}, in quantities . ( is the quantity
of the input i for DMU j and is the quantity of the output k for DMU j).

The efficiency value of a DMU, , is computed as:
(1)
DMU is efficient if and the deviation variables in the reformulated model below,
and , are both zero:
(2)
where ε is a non-archimedean constant.

A ranking of inefficient DMUs can be performed in accordance with the efficiency values obtained from the
previous DEA (the inefficient units obtain their level of efficiency reflected by a score lower than 1), whereas
the efficient DMUs cannot be ordered in these terms since they all have a score efficiency value equal to 1.
Various approaches in DEA are also available that extend the basic models for the additional ranking of ef-
ficient and not only the inefficient DMUs. One of the most commonly used approaches consists of dropping
the DMU being ranked from the initial set of DMUs. This approach is based on super-efficiency since it
can lead to efficiency values greater than 1, which can be used to rank all the DMUs. One advantage of this
approach over others is that it is applied to rank only the efficient DMUs because the super-efficiency values
coincide with the efficiency values for all inefficient units.
For the standard input-oriented CCR DEA model, the super-efficiency value of a DMU, , is com-
puted as:
(3)


4.2. Multivariate analysis
Techniques of Multivariate Analysis that will be applied for the treatment of data are those of Factorial analysis
and Cluster analysis.
4.2.1. Factorial analysis

The purpose of factor analysis is to identify the factors or dimensions which explain the correlations between
the variables. The information initially contained in the observed variables is summarized, through combina-
tions of these, thereby obtaining the dimensions sought. A small number of latent or unobserved variables
(dimensions or factors) are then achieved, which explain, in the simplest possible way, the reasons for the
variety in the behavior of a set of individuals for whom a set of original variables have been observed.
The act of dealing with variables with different scales leads to the standardization of the variables (for each
variable, its average is subtracted and divided by its standard deviation) and to the consideration of the cor-
relation matrix. The variables are therefore treated in relative terms.
4.2.2. Cluster analysis

The factors extracted through the application of Factorial Analysis are employed to identify groups of
provinces with homogeneous characteristics through the use of Cluster Analysis. This statistical technique
of multivariate analysis is a method of classification that groups objects based on the characteristics they
possess. The main objective of this analysis is to identify groups of relatively homogeneous cases based on
the selected characteristics. The fundamental idea is that the objects belonging to the same conglomerate
or group are as similar as possible to each other, while the conglomerates differ as much as possible (Hair
et al., 2000).
For the application of Cluster Analysis, the Euclidean squared distance is used as a measure of similarity be-
tween individuals (in our case, the provinces) in order to measure how close or far the values of the variables
are. For the creation of the clusters, there are two different methods, hierarchical methods, and non-hierar-
chical methods. The hierarchical methods contemplate all possible groupings. Non-hierarchical methods are
characterized by the allocation of groups of individuals in a fixed number of clusters. In our analysis, first, a
hierarchical process is applied, which determines the most appropriate number of clusters, k. Subsequently,
the non-hierarchical method of k-means is applied.
5. Results
For the analysis of the labor efficiency in the rural tourism sector of the 50 Spanish provinces, the results are
presented in two different ways: on the one hand, the ranking of provinces according to their labor efficiency/
inefficiency through the application of the DEA; and the other hand, the analysis of efficiency by applying
Multivariate Analysis techniques.
5.1. Labor efficiency ranking

Results show that there are two provinces that achieve labor-relative efficiency: Asturias and Balearic Islands.
We talk about relative efficiency in terms of how efficient a province can be when measured in comparison
to the remaining 49 provinces. Table 5 presents the provincial ranking of labor efficiency of the rural tourism
sector and shows the provinces in decreasing order according to the super-efficiency value.
Despite the development of rural tourism in Spain, this has yet to achieve a full or efficient impact on em-
ployment in the Spanish provinces since there are few provinces that achieve labor efficiency.

Table 5
Ranking and super-efficiency values of the provinces
Ranking of provinces Super-efficiency value Ranking of provinces Super-efficiency value
1 Balearic Islands 3.6929970 26 Almería 0.4743742
2 Asturias 1.1559970 27 Palencia 0.4700622
3 Ávila 0.9817746 28 Castellón 0.4678038
4 Albacete 0.8199854 29 Zamora 0.4656868
5 Santa Cruz de Tenerife 0.8045722 30 A Coruña 0.4602914
6 León 0.8017380 31 Guadalajara 0.4586041
7 Cáceres 0.7652326 32 Ourense 0.4363128
8 Girona 0.7544049 33 Badajoz 0.4238794
9 Lleida 0.7510497 34 Tarragona 0.4231170
10 Salamanca 0.7195032 35 Teruel 0.4217691
11 Cantabria 0.7161946 36 La Rioja 0.3970909
12 Segovia 0.6986611 37 Córdoba 0.3905162
13 Huelva 0.6917766 38 Alicante 0.3901605
14 Las Palmas 0.6394231 39 Zaragoza 0.3866835
15 Navarra 0.6339226 40 Ciudad Real 0.3825063
16 Barcelona 0.6329665 41 Granada 0.3817472
17 Valencia 0.6118908 42 Jaén 0.3800827
18 Madrid 0.6058760 43 Lugo 0.3800826
19 Huesca 0.5820033 44 Cádiz 0.3792652
20 Burgos 0.5437632 45 Pontevedra 0.3673171
21 Málaga 0.5388433 46 Murcia 0.3449025
22 Seville 0.5058400 47 Gipuzkoa 0.3353903
23 Soria 0.4946934 48 Álava 0.3090391
24 Cuenca 0.4827923 49 Toledo 0.3079688
25 Valladolid 0.4775045 50 Bizkaia 0.3035764
Source: Authors.
Figure 3 represents the spatial distribution of Spanish provinces by considering their efficiency scores. Light
greyish colors predominate since these delimit a low labor efficiency score. The average score of provincial
efficiency is 0.5438, which verifies that 31 of these provinces achieve a below-average efficiency score, while
just over a third (19 out of 50) exceeds that score.
Figure 3
Provincial representation in terms of efficiency score
Efficiency score
■ 1
■ [0.8-1)
■ [0.5-0.8)
Source: Authors. ■ [0-0.5)

The protection of the environmental, ecological, and cultural diversity of rural areas remains fundamental
for the sustainable development of the environment. This suggests that there may be a relationship between
labor efficiency and the size of the protected natural areas in the province (natural and national parks, natural
reserves, protected landscapes, and natural monuments), since the provinces of the ranking that present the
highest super-efficiency score are those with the greatest number of hectares of protected land. Therefore,
the possible relationships between this measurement of efficiency and the hectares of protected land in each
province are evaluated. In order to test this hypothesis, the Kruskal-Wallis test is applied since the normality
of the samples remains unverified (Kruskal & Wallis, 1952; Brockett & Golany, 1996). It is verified whether
significant differences exist in the average values obtained in the super-efficiency scores among the various
groups in which the provinces have been divided in terms of the protected hectares. Four groups of provinces
are considered according to the area of protected land: less than 30,000 hectares; between 30,000 and 100,000
hectares; between 100,001 and 200,000 hectares; and more than 200,000 hectares. The Kruskal-Wallis test
(Chi-squared=9.375; p=0.025) leads us to reject, with a 5% significance, the hypothesis of equality of means
for the super-efficiency scores in the four groups of provinces categorized in terms of the area of protected
land. When observing the average values for each group, it can be observed that the provinces with the high-
est number of protected hectares obtain a higher average super-efficiency score (0.6259) than that of the
provinces with the least protected hectares (0.4495). This verifies that the “environmental charm” of the area
influences its labor efficiency.
5.2. Analysis of efficiency

In the second part of the analysis, multivariate analysis techniques are used (Factor analysis and Cluster
analysis) in an attempt to determine the possible links between provinces (based on the inputs and outputs
employed) and the efficiency scores obtained.
5.2.1. Factorial analysis

Bartlett’s test of sphericity confirms whether the correlation matrix is an identity matrix, which would indi-
cate that the factorial model is inadequate. Bartlett’s test (481.822) is obtained from the χ2 transformation
of the determinant of the correlation matrix, whereby the higher it is, and therefore the lower it's level of
significance (0.000), the more unlikely it is that the matrix is an identity matrix, and the more appropriate
the factor analysis becomes, which is what happens in our case. As a complement to this analysis, the Kaiser-
Meyer-Olkin coefficient, KMO, can be calculated (0.752), whose value results in excellent sample suitability;
in our study, therefore, the application of factor analysis is completely appropriate.
According to the criteria for the selection of eigenvalues (retain those whose value exceeds the unit), two
dimensions have been selected, which explain 88.284% of the variability (see Table 6). This percentage of
explained variance is more than acceptable since the lower level of acceptance is fixed at 60% in studies
related to Social Sciences (Hair et al., 2000). The results show a projection of the data in a small space with
small dimensions, which was predictable due to the high correlations observed when the isotonicity between
inputs and outputs was analyzed.
Table 6
Extracted dimensions and explained variance
%
%
Eigenvalue cumulative
of variance variance
Dimension 1. Tourist-labor efficiency 4.937 70.526 70.526
Dimension 2. Length of stay 1.243 17.758 88.284
Source: Authors.

In Table 7, the factorial matrix is shown, in which the linear correlation coefficients between the dimensions
and the variables are collected. This matrix indicates a load of each variable in each dimension such that the
dimensions with higher factor weights in absolute terms indicate a close relationship with the variables.
The first dimension, at 70.526% of the total variability (Table 6), can be explained as being strongly related
to six of the seven variables used (seats, establishments, labor staff, overnight stays, travelers, and efficiency
score). This relationship is determined by the positive correlations (greater than 0.8) of these variables (see
Table 7), which indicates that high (or low) values of the dimension are associated with provinces with high
(or low) values of seats offered, of establishments, of staff, of overnight stays, of travelers, and of efficiency
score. We will label this first dimension as tourist-labor efficiency.
The provinces which obtain higher scores in the first dimension are in order of relevance or higher score
(Table 8): Asturias with 4.14 points, Cantabria with 1.91 points, Ávila with 1.62 points, Girona with 1.51
points, and Cáceres with 1.35 points.
Of the total variance, 17.758% can be explained by the second dimension (Table 6). The provinces which
make up this dimension present a strong and positive relationship with the variable length of stay (Table 7),
which indicates that the high (or low) values of the dimension are associated with the provinces with high (or
low) values of the number of days stayed at an establishment. In accordance with these results, this dimension
is labeled as the length of stay.
The provinces with the highest scores in the second dimension are (see Table 8): Santa Cruz de Tenerife (3.33
points), Malaga (3.12 points), Balearic Islands (2.85 points), and Las Palmas (1.78 points). Note that these
are provinces in which sun-and-sand tourism is deeply rooted, and it can therefore be presumed that travelers,
in addition to rural tourism, take advantage of the visit to practice tourism of more traditional nature in these
areas. It can also be observed that the province of Balearic Islands obtains the highest score in the ranking of
efficient provinces; however, it does not appear as a relevant province in Dimension 1. One possible cause is
that the variable length of stay may have stimulated the efficiency of the province, thereby strongly weight-
ing it in the efficiency ranking with DEA; in contrast, in factor analysis, this variable holds no relevance in
determining Dimension 1, which now defines efficiency.
The results obtained from the factor scores in each of the dimensions extracted are shown in Figure 4. Note
how most provinces are located on the right half of Dimension 1, which indicates that these provinces are
not efficient in tourism and labor aspects. Regarding Dimension 2, it can be observed that the provinces are
mostly at the top of that dimension. It can therefore be stated that rural tourism in Spain has a short length
of stay; there are fewer provinces in which the length of stay is higher, and almost all are coastal provinces
with a strong tradition for sun-and-sand tourism. Therefore, as indicated above, it is likely that rural tourism
is combined with coastal tourism, and hence the stays are longer.
Table 7
Factorial weights of the factorial matrix
Variables Dimension 1 Variables Dimension 2
Seats 0.980 Length of stay 0.932
Establishments 0.919 Travelers -0.413
Employees 0.914 Overnight stays -0.296
Overnight stays 0.913 Employees 0.267
Travelers 0.866 Efficiency score 0.170
Efficiency score 0.825 Establishments 0.121
Length of stay 0.175 Seats -0.031
Source: Authors.

Table 8
Factor scores on the dimensions
Provinces Score dimension 1 Provinces Score dimension 2
Asturias 4.14 Santa Cruz de Tenerife 3.34
Cantabria 1.91 Málaga 3.12
Ávila 1.62 Balearic Islands 2.85
Girona 1.52 Las Palmas 1.79
Cáceres 1.36 Castellón 0.69
Navarra 1.18 Huesca 0.58
Barcelona 0.88 Álava 0.58
Segovia 0.85 Córdoba 0.56
Huesca 0.85 Teruel 0.54
Lleida 0.76 Granada 0.53
Alicante 0.75 Almería 0.51
Balearic Islands 0.69 Jaén 0.49
Salamanca 0.67 Barcelona 0.48
Madrid 0.63 Ciudad Real 0.48
León 0.63 Girona 0.46
Málaga 0.30 Cádiz 0.45
Burgos 0.29 Navarra 0.29
Valencia 0.15 Asturias 0.19
Soria 0.12 Alicante 0.02
Castellón 0.04 Gipuzkoa -0.09
Cuenca -0.01 Ávila -0.16
Santa Cruz de Tenerife -0.10 León -0.20
Zamora -0.28 Lleida -0.24
Guadalajara -0.31 Huelva -0.26
Teruel -0.32 Salamanca -0.31
Gipuzkoa -0.40 Seville -0.36
Tarragona -0.43 Valencia -0.41
A Coruña -0,45 Palencia -0.43
Toledo -0.49 Tarragona -0.45
Huelva -0.52 Valladolid -0.46
Palencia -0.56 Zaragoza -0.52
Valladolid -0.60 Badajoz -0.55
Murcia -0.61 Ourense -0.56
Zaragoza -0.65 Guadalajara -0.58
Lugo -0.65 Zamora -0.59
Pontevedra -0.68 Pontevedra -0.60
Almería -0.70 Cuenca -0.60
Córdoba -0.74 Burgos -0.62
Jaén -0.78 La Rioja -0.64
Ciudad Real -0.79 Murcia -0.65
La Rioja -0.80 Lugo -0.66
Badajoz -0.81 A Coruña -0.67
Bizkaia -0.82 Soria -0.72
Seville -0.85 Albacete -0.72
Ourense -0.91 Toledo -0.74
Las Palmas -0.98 Segovia -0.75
Albacete -0.98 Cáceres -0.78
Granada -0.99 Bizkaia -0.79
Álava -1.06 Madrid -1.07
Cádiz -1.10 Cantabria -1.77
Source: Authors.

Figure 4
Factorial scores in each dimension
Source: Authors.
5.2.2. Cluster analysis

The next stage involves the application of cluster analysis. The objective of this technique is to obtain provinces
with similar characteristics in the dimensions previously extracted.
The method selected to obtain the clusters is non-hierarchical: the scores obtained in the different provinces
for the two dimensions are applied, and it is necessary to determine a priori the number of clusters to be
defined. Therefore, a cluster analysis should be carried out first through hierarchical procedures to ascertain
the most appropriate number of clusters and, together with their configuration, which serve as a starting
point for the non-hierarchical method.
After performing various tests considering different models with different numbers of clusters, the analysis
of those variations in the residual variance when a variable number of clusters are considered, leads to four
clusters being set as the optimal number since it is the one with the lowest residual variance.
Table 9
Average scores in the clusters
Cluster
1 2 3 4
Dimension 1. Labor-tourist efficiency -0.57897 4.14481 -0.02085 0.99190
Dimension 2. Length of stay -0.23269 0.18587 2.77560 -0.29106
Source: Authors.
Table 9 shows the average scores of the clusters in the two dimensions. According to these average scores
(Table 9) and the ranking of the provinces in the clusters (Table10), a classification of the provinces into three
groups could be made: first, those that have good labor efficiency, whereby cluster 2 has the highest average
score with respect to the first dimension, which represents labor and infrastructure efficiency (the province of
Asturias features as the most prominent in terms of this dimension); secondly, provinces that have half labor
efficiency (Alicante, Ávila, Barcelona, Burgos, Cáceres, Cantabria, Girona, Huesca, León, Lleida, Madrid,

Navarra, Salamanca, Segovia), formed by those provinces that obtain the second-highest average score in
the first dimension; and finally, the group of provinces that have a score below the provincial average in the
tourist-labor efficiency dimension (Table 9), which are labeled as having bad labor efficiency.
Cluster 3 receives the highest average score with respect to the second dimension and therefore represents those
provinces of rural tourism with special importance in the length of stay. The provinces which obtain the highest
average score in the second dimension are Balearic Islands, Málaga, Santa Cruz de Tenerife, and Las Palmas
(cluster 3). The province which obtains the second-highest average score in the second dimension is Asturias.
Table 10 shows the provinces that make up each of the clusters.
Table 10
Clusters of the provinces
Cluster Province
31 provinces: Álava, A Coruña, Albacete, Almería, Badajoz, Bizkaia, Cádiz, Castellón, Ciudad
Real, Córdoba, Cuenca, Guipuzkoa, Granada, Guadalajara, Huelva, Jaén, La Rioja, Lugo,
1 Murcia, Ourense, Palencia, Pontevedra, Seville, Soria, Tarragona, Teruel, Toledo, Valencia,
Valladolid, Zamora, Zaragoza
2 1 province: Asturias
3 4 provinces: Balearic Islands, Málaga, Santa Cruz de Tenerife, Las Palmas
14 provinces: Alicante, Ávila, Barcelona, Burgos, Cáceres, Cantabria, Girona, Huesca, León,
4 Lleida, Madrid, Navarra, Salamanca, Segovia
Source: Authors’ own.
The analysis carried out confirms that Asturias is the most “complete” province in the sector since it combines
both labor efficiency and length of stay.
Multivariate Analysis facilitates in contrasting the results obtained by the DEA methodology since it has
been proven that this method excessively weighs the variable length of stay, which causes the efficiency of the
province to be “masked”, as occurs in the Balearic Islands.
6. Conclusions
The growing importance of the rural tourism industry in Spain as an economic activity warrants the analysis
of the relative efficiency of rural areas as tourist destinations. Rural tourism emerges as an alternative to sun-
and-sand tourism due, in general, to the change experienced in demand by tourist consumers. This metamor-
phosis of demand has favored the possibility of generating employment in rural areas through tourist activity.
Tourism constitutes one of the few economic activities that are best surviving the economic crisis: it has
favored rural tourism, which has created employment in periods during which it is more common for jobs
to be lost. However, in Spain, the effect on employment depends on the geographical area; in general, labor
efficiency is not achieved except in the cases of Asturias and the Balearic Islands, where rural tourism has a
strong and positive impact on employment. Asturias, with little traditional sun-and-sand tourism, is not the
classic tourist destination, but it does enjoy a varied architectural, natural, and landscape heritage and can
offer extensive heritage, local gastronomy, and cultural sites. However, the Balearic Islands provide the desti-
nation of a more traditional type of tourism in Spain, where tourists mainly seek sun-and-sand holidays. The
variable length of stay of the holiday period carries important weight for labor efficiency to be reached in the
said province, and it can be supposed that tourists who visit the Balearic Islands combine rural with coastal
tourism, hence extending their stay in this area. This is confirmed by the provincial groupings obtained since
the provinces with strong roots in coastal tourism (Santa Cruz de Tenerife, Malaga, Balearic Islands, and Las
Palmas) are those with the greatest number of overnight stays; this variable stimulates the efficiency of the
Balearic Islands. Asturias is, therefore, the only Spanish province where rural tourism has a stronger and more
positive impact on employment in the sector.

The inequalities in labor efficiency of the Spanish provinces can be explained through factors such as the
presence of places with charm and environmental protection due to the direct relationship between the area
of protected land with the labor efficiency of the province. By investing in tourism that respects nature and
the environment, tourism and, consequently, employment are both promoted.
According to the results obtained, efficiency improvements are necessary to increase competitiveness; this
can be achieved with reforms in basic services in rural areas, such as education, health, and communication
infrastructure, increased technological investments, and innovation incentives.
For future research, a broader analysis of the sector could be considered, which would enable the identification
of tourism demand in rural areas. This, in turn, would contribute towards ascertaining whether the tourism
under development is sustainable, whether it improves the quality of life, and whether it affects the income level
of the population of rural areas. These advances would all contribute towards the correct planning of the sector.
It would also be interesting to extend the sample with the aim of comparing tourism efficiency across Euro-
pean countries, especially those in Western Europe, where this sector is more established and enjoys a stronger
tradition. The increase in the sample would enable a variety of inputs and outputs to be introduced into the
study without losing any power of discrimination; special interest could be focused on variables that capture
the environmental impact, both locally and globally, in order to achieve sustainability.
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Submitted: May 26, 2021

Revised: October 26, 2021
Revised: November 25, 2021
Revised: January 19, 2022
Revised: February 01, 2022
Accepted: March 24, 2022


Lectura 04 C4 - EPT 04. A DEA Approach For Evaluating The Labor Efficiency in The Rural Hotel Industry A Case Study in Spain

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Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N.

2. The rural hotel industry in Spain

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

% Rural tourists % Employees in rural tourism

3. Efficiency analysis in the tourism sector

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

4. Data and methodology

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

4.1. Data envelopment analysis

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

where ε is a non-archimedean constant.

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

4.2.1. Factorial analysis

4.2.2. Cluster analysis

5.1. Labor efficiency ranking

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

5.2. Analysis of efficiency

5.2.1. Factorial analysis

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

5.2.2. Cluster analysis

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

Submitted: May 26, 2021

Francisca J. Sánchez-Sánchez / Ana M. Sánchez-Sánchez / N. Pulido / D. V. Borrero

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